Coforge extends fall on chairman's exit; Jefferies sees limited impact

Last week, Coforge's Chairman resigned with immediate effect amid concerns raised by an internal audit over the Board's Evaluation Exercise.

Coforge Ltd.’s share price continued its decline on Tuesday, extending losses into a second week after the stock plunged nearly 9 per cent last Wednesday following the sudden resignation of its chairman. The stock fell another 3.5 per cent on Tuesday, taking its five-session decline to nearly 3 per cent.

 

As of 01:56 PM, the company’s share price was trading 3.51 per cent lower at ₹1,781.70 apiece, meanwhile, Nifty 50 was trading 0.57 per cent lower at 23,265.15. The company’s stock hit an intraday low of  per cent at ₹1,780, down 3.57 per cent.

 

On Wednesday, Coforge’s Chairman resigned with immediate effect amid concerns raised by an internal audit over the Board's Evaluation Exercise. The company in an exchange filing on Wednesday, said that the members of the Board noted the resignation of Non-Executive Independent Director and Chairperson of the company, OP Bhatt, with immediate effect. The release added that the Board decided to designate Vivek Sharma, Non-Executive Independent Director, as interim Chairperson of the company till January 31, 2027.

 

 

However, to address the resignations of Chairman, O.P. Bhatt, and the Chair of the Nomination and Remuneration Committee (NRC), D.K.Singh, the company held an investor call on Monday with all seven members of the board, including the remaining three independent directors, on the call.

 

Global brokerage firm Jefferies noted that the company has reiterated its FY27 growth guidance, with management continuing to target 20.5-21 per cent consolidated Ebitda margin, at least 15.5 per cent consolidated Ebit margin and over 100 per cent free cash flow to PAT conversion. 

 

“The longer term aspiration of reaching $5 billion in revenue also remains intact, with operations, client engagements, and the broader execution outlook remaining unaffected. For Q2FY27, Coforge expects its highest-ever quarter for large-deal signings, matching the large-deal volume achieved an entire year two/three years ago,” the brokerage noted.

 

Jefferies further added that, “The Board's clarification yesterday suggests that this issue is less about governance at Coforge and more about the conduct of departing directors. We see limited impact of these developments on Coforge's growth strategy.” Vipin Kumar, AVP research at Globe Capital Market noted that after briefly breaching price resistance on the weekly chart and witnessing a bullish breakout, the stock has retraced. Selling pressure intensified following news of the sudden exit of Chairman O.P. Bhatt. "At the current juncture, the stock is trading close to the support level of ₹1,750 spot. A decisive close below this level could drag it further toward ₹1,550–₹1,600, which would offer medium-term investors an accumulation opportunity," he added. PL Capital noted that the CFO reiterated that the recent Board developments have no impact on Coforge’s business operations, financial performance or outlook, with management fully focused on execution. The company maintained its FY27 guidance of 20.5–21 per cent Ebitda margin.  Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.